I think what Gates is saying is that, while the "bits and bytes" economy is getting larger, perhaps lawmakers are still thinking in the terms of the "old model"

I think what Gates is saying is that, while the "bits and bytes" economy is getting larger, perhaps lawmakers are still thinking in the terms of the "old model" which Gates indicates is obsolete. He then says: That has major implications for everything from tax law to economic policy to which cities thrive and which cities fall behind, but in general, the rules that govern the economy haven’t kept up. This is one of the biggest trends in the global economy that isn’t getting enough attention.